Analyst: Auto to Steer Banner Upfront Haul

Increased sales will lead to record windfall in spring bazaar

While client budgets have not been finalized, at least one analyst believes that a surge in auto sales will lead to a record windfall in this year’s upfront.

In a report issued this afternoon, Moody’s Investors Service svp Neil Begley said U.S. auto sales in 2012 are on pace to grow 9.3 percent to around 14 million units, a spurt that should lead to increased spending on national broadcast and cable TV.

Auto dollars account for 13 percent of all ad sales revenue at the Big Five broadcast nets, which last year added up to $21.1 billion. On the local side (stations and cable systems), dealers and manufacturers account for as much as 25 percent of all sales.

“Strong demand for automotive advertising will magnify the expected impact of political campaign spending and the London Olympics,” Begley said. “Owners of broadcast networks and TV stations will benefit the most from this surge, and among diversified media companies, CBS Corp. stands to see the most advertising revenue gains.”

As it derives as much as 64 percent of its overall revenue from advertising, CBS Corp. is best situated to take advantage of big gains in the auto category. By comparison, NBCUniversal is less exposed to the vicissitudes of the marketplace (36 percent). Walt Disney Co. and News Corp. are “the most diversified of the media conglomerates and will therefore be the least affected by growth in auto ad spending,” Begley said.

The analyst went on to add that Moody’s anticipates record-high pricing in the 2012-13 upfront and in the subsequent scatter markets, which coincide with the launch of new car and truck models. In such a scenario, the networks can be expected to hold back as much as 5 percent to 10 percent of their inventories in order to take advantage of higher scatter rates.

Last year, the networks booked 80 percent of their available time, for an aggregate haul of $9.25 billion. CBS commanded broadcast’s highest price increases, writing deals at a 13 percent premium over its year-ago rates.

“I like the way they’re thinking, but if I told you I had any idea how things were going to play out in June, I’d be grossly overstating my position,” said one ad sales exec. “It’s too soon to tell.”

CBS chief Les Moonves is characteristically bullish on his prospects. In what has become a rite of spring, the media mogul told investors at the annual Deutsche Bank Media and Telecom confab that his sales team will command “double-digit increases” in the upfront.

If Moonves is reading the tea leaves correctly, CBS can expect another banner upfront bazaar. Last year the network took in about $2.65 billion in early commitments, an increase of some $150 million versus the 2010-11 upfront.

Automakers account for four of the top 10 TV advertisers. Last year, General Motors invested $1.11 billion in TV time, outspending Chrysler ($890.4 million), Ford ($781 million) and Toyota ($767.4 million).